Delhi HC Upholds Eviction Order Against National Herald Publisher AJL

Live Law

February 28, 2019

A division bench of the Delhi High Court today upheld the eviction order passed against National Herald publisher Associated Journals Limited to vacate ITO premises where Herald house is situated. The eviction order under the Public Premises Act was passed by Centre and the Land and Development Office(LDO) stating that no press has been functioning in the premises for at least the past 10 years and it was being used only for commercial purposes in violation of the lease deed. The order was passed in the backdrop of majority of shares of AJL being transferred to the company Young India (YI), in which Congress chief Rahul Gandhi and his mother Sonia Gandhi are shareholders.

Challenging the eviction order, AJL approached the High Court. The single bench of Justice Sunil Gaur had repelled the challenge last December.The bench took note of the fact that AJL has been taken over by Young Indian Company for all practical purposes. It said: "This Court is conscious of the fact that Young Indian Company is a charitable company, but modus operandi to acquire 99% of AJL's shares speaks volumes. The manner in which it has been done is also questionable."

Upholding the single bench view that the entire transaction of transferring the shares of AJL to Young India was nothing but a clandestine and surreptitious transfer of the lucrative interest in the premises to Young India, the bench observed:

"Even though Dr.Singhvi had argued that there is nothing wrong in such a transaction and it is legally permissible, but if we take note of the principles and the doctrine for which the theory of lifting of the corporate veil has received legal recognition, we have no hesitation in holding that the entire transaction of transferring the shares of AJL to Young India was nothing but, as held by the learned writ Court, a clandestine and surreptitious transfer of the lucrative interest in the premises to Young India. In fact, the contention of Dr.Singhvi has to be rejected and rightly so was rejected by the Single Judge even though without applying the principle of lifting of the corporate veil. In case the theory of lifting of the corporate veil, as discussed hereinabove, is applied and the transaction viewed by analyzing as to what was the purpose for such a transaction, the so called innocent or legal and permissible transaction as canvassed before us, in our considered view, is not so simple or straight forward as put before us, but it only indicates the dishonest and fraudulent design behind such a transaction as laid down in various judgments."

It was found that by transfer of AJL's 99 per cent shares to YI, the beneficial interest of AJL's property worth Rs 413.40 crore stands "clandestinely" transferred to YI.

This order of the single bench was confirmed today by the division bench of Chief Justice Rajendra Menon and Justice V K Rao. AJL had contended that even a 100 percent shareholder of a company would not become the owner of its assets.

The Centre had contended before the court that transfer of 99 per cent stake in AJL to YI, when the latter bought the former's Rs 90 crore debt for a consideration of Rs 50 lakh, led to a "virtual" sale. In its plea, AJL has also said the digital versions of English newspaper National Herald, Hindi's Navjivan and Urdu's Qaumi Awaz have commenced from 2016-17.

The weekly newspaper National Herald on Sunday' resumed on September 24, 2017, and the place of publication was the ITO premises, AJL said, adding that the Hindi weekly newspaper Sunday Navjivan was being published since October last year from the same premises.